The Institute for Justice - Funeral services necessarily involve a difficult time for the consumers who need them, and the pain of loss can often be compounded by the logistical expenses involved. Unfortunately, the cost of funeral expenses is significantly higher when occupational licensing is involved.
In a new study published in the June 2017 edition of the International Review of Law and Economics, Brandon Pizzola and Alexander Tabarrok use a “natural experiment” to show that occupational licensing requirements on funeral service providers increase the cost of workers and services. Conversely, the lack of such requirements decreases costs.
Colorado delicensed its funeral services industry in 1983, providing researchers an opportunity to compare the effects of the regulatory change in the state to national developments. Unsurprisingly, Pizzola and Tabarrok found that funeral costs fell in Colorado, compared with the rest of the United States, because licensing causes a “wage premium” of 11 to 12 percent due to lack of competition. This finding echoes other research that has shown licensing requirements in other industries lead to similar spikes in cost. Insiders, in funeral services and other industries, often support licensing requirements precisely for this reason: Licensing creates artificial “job protection” by making it harder for competition to drive down costs.
